Snap may set an example for other private companies which are looking for IPOs

It is not news that the company, Snap, said its IPO would be the first to offer shares with no voting power and the founders will continue to rule the company even after they step down. Many big investors oppose this idea as they are more likely to hold significant numbers of shares that allow them to have some control over the companies under the normal situation. I think that if Snap could achieve its IPO target of $3bn, more private companies will use the same IPO strategy. This can be a positive thing for the market, especially given the number of new IPOs in recent years is declining and more private companies decide to stay private as the managers and founders want to have more control over their companies.

The voteless share is definitely priced lower than the shares under the normal circumstance, as the voting right has a value to the share price. Sometimes managers have great influence over their companies as they have unmatched skills and talent. There are many such figures including Steve Jobs, Elon Musk, Warren Buffett and many others. In these talent managers' companies, sometimes the large shareholders' votes may cause noise and confusion in the companies and drag down the companies' performance, that some people think Steve Jobs was voted to leave Apple is a classic example. If investors deeply believe in the founders or the managers of a company, holding voteless shares may not be a bad thing that it could reduce the uncertainty caused by the possible conflict between the ownership and the management. In addition, it does not make any difference to small investors as they are unlikely to hold significant numbers of shares to have a say in the board. It also avoids a hostile takeover. To large investors, the risks of investing in such companies increase as they cannot make a change (lower its leverage ratio) inside the company to manage its risk internally.

Such companies that only offer voteless shares naturally and objectively have higher level of risks that the future of a company is fully controlled by a very limited group of people. However, to the stock market, more private companies may use such strategy for refinance themselves, as it is very attractive to many private company founders and owners.